Retailers make beeline for SE AsiaKorean retailers seem to be shifting their attention from China, where their gaze has been locked for the last few years, to emerging markets in Southeast Asia.
Lotte Shopping and Shinsegae Group are set to withdraw their businesses in China in the face of yawning deficits and refocus on more tropical countries down south, industry figures say.
Shinsegae, the country’s second-largest retailer, opened its first store in Shanghai in 1997 and grew its presence over the next two decades before scaling back the number from 27 to 16 in the last two years due to chronic losses, they added.
E-Mart, the group’s discount store chain, currently runs nine stores in Shanghai, five in Tianjin and two in Jiangsu Province - one in Wuxi and another in Kunshan. All are located in eastern China. The company estimated its annual losses for last year on the mainland hit 94 billion won ($87 million).
“We have almost finished restructuring our stores in China and we will change our original strategy by expanding our przesence in the western and northern parts of the country,” said an E-Mart spokesman.
It also plans to accelerate its expansion into the Vietnamese market, he added.
E-Mart has teamed up with Vietnam’s seventh-largest conglomerate U&I Group with the aim of opening its first Vietnamese store in Hanoi by the end of 2013, which it aims to use as a regional base. The two companies are reported to be at the final stage of selecting a site.
“Our initial plan was to advance into Southeast Asia using China as a bridgehead, but we decided that the former market is more important for now,” a Shinsegae employee said.
Lotte, which has also struggled to make a dent in China, said in June it will sell off its first Chinese department store as it has proven a money-loser since it was set up in 2008.
It is now targeting the Southeast Asian luxury market and plans to open a department store in Jakarta in May, and another in Hanoi in 2014.
Lotte Mart, the group’s chain of discount stores, is also set to grow. It now has 100 stores in China, 30 in Indonesia and three in Vietnam.
“Our sales are forecast to jump 7 percent in China, while those in Indonesia and Vietnam are expected to rise 14 percent and 10 percent, respectively,” said a Lotte Mart representative.
Home shopping companies and bakery franchises are also speeding up moves to tap this part of Asia.
CJ O Shopping launched SCJ TV Shopping in July 2011 in Vietnam and had grabbed 64 percent of the country’s home-shopping market within six months.
GS Home Shopping also launched its business in Thailand in November last year. It set up in Vietnam this February and Indonesia in July.
By Kim Jung-yoon [firstname.lastname@example.org]